Business Test prt. 8

The merger of McKesson, the leading U.S. drug wholesaler, and HBOC, a producer of health-care inventory software, is an example of a(n) _____ merger.

Vertical

Why would a company choose to engage in a conglomerate merger instead of a vertical or horizontal merger?

a conglomerate merger is done to reduce risk

The headquarters, seller, and supplier of the service or method of operation of a franchise is called the:

franchisor

Tonya Thomas is tired of working for other people. She wants to start her own administrative services businesses and control her own work schedule. She wants to have sole responsibility for all business decisions. Thomas should form a(n):

sole proprietorship

Which of the following statements about the taxation of partnership is true?

Partnerships file tax returns but pass profits and losses on to partners who report them on their tax returns

Multinational oil companies such as ExxonMobil, Royal Dutch Shell, or BP are active all the way along the supply chain from locating crude oil deposits, drilling and extracting crude, transporting it around the world, refining it into petrochemicals such as gasoline, to distributing the fuel to company-owned retail stations, where it is sold to consumers. To gain this complete control of the various resources needed to product oil and gas, the companies had to have engaged in _____ mergers.

vertical

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. The mushrooms are expensive, and there were other unexpected financial problems, so Nyami and Rice asked Bill Ng to become a limited partner. This means that Ng:

agrees not to participate in day-to-day management of the firm

Restricted operating freedom in franchising means that the franchisee must conform to:

all of the above

Jayson Tully is contemplating the purchase of a Popeye's Chicken franchise. Tully has made a list of the disadvantages that he assumes he will face as a new business owner. Which of the following is actually an advantage?

assistance in building plans

Clarence Danvers is buying a Cinnabon franchise at the airport in Tulsa. Danvers knows that he will get all of the following EXCEPT:

assistance in personal income tax preparation

Ease of formation, flexibility, and diversity of management are advantages of the _____ form of business ownership.

partnership

_____ are organizations formed by individuals or businesses with similar interests to achieve greater economies of scale and economic power through collective ownership.

cooperatives

Rebecca Siddoway owns and operates Country Candies. Siddoway specializes in making rich, creamy toffees that she packages in attractive gift boxes and sells through the mail. what would be the advantage to Siddoway if she decides to incorporate her business?

corporations have an enhanced ability to attract financing.

Paul Hyatt owns and operates DeepClean, a Florida-based company that cleans up mold and mildew in homes and businesses. As the sole proprietor of the business, he has unlimited liability, which means:

he is fully liable for all business debts

The franchisor generally does NOT provide the franchisee with:

help in employee selection

Fred Pittman has invested $10,000 in his son's motorcycle repair shop, but he takes no part in its management. Pittman is a(n):

limited partner

The fact that a corporation has limited liability means:

owners' liabilities are limited to the amount invested

Stewed Tomatoes was an "all-girl power-pop trio." Its three members realized that many musicians feel stifled when making music in a sterile studio environment while the clock ticked away expensive hours, so the three girl band members created Materville Studios, a multimedia production house and recording studio in downtown Chicago. They share work responsibilities and profits equally. Materville Studios is a(n):

partnership

Before selling stock to the public, a corporation must register with the:

securities and exchange commission

The most common form of business organization is the:

sole proprietorship